Alaimo v. Aetna Life Ins. Co.

DECISION & ORDER

LAWRENCE J. VILARDO, UNITED STATES DISTRICT JUDGE

BACKGROUND

On January 12, 2021, the plaintiff, Mary Alaimo, ^[1] commenced this action in the Supreme Court of the State of New York, County of Chautaqua. Docket Item 1-2. She alleges that her late husband, Alan R. Alaimo, had a life insurance policy with the defendant, Aetna Life Insurance Company (“Aetna”), ^[2] and she seeks a declaration that the policy was in effect at the time of his death. Id. at ¶ 33. She also alleges that as Alan's beneficiary, she is owed an $82, 000 death benefit and that Aetna breached its life insurance contract by refusing to pay her that benefit. Id. at ¶ 33-37. And she alleges that Aetna breached the implied covenant of good faith and fair dealing by

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failing to notify Alan that Aetna had terminated Alan's life insurance policy. Id. at ¶ 38-44.

On March 10, 2021, Aetna removed this action to this Court. Docket Item 1. A month later, Aetna moved to dismiss the complaint with prejudice, arguing that Mary failed to state a claim for which relief can be granted. Docket Items 6, 7, 8. On May 19, 2021, Mary responded, Docket Item 11, and on June 11, 2021, Aetna replied, Docket Item 12.

For the following reasons, Aetna's motion to dismiss is granted in part and denied in part. Mary's state law claims are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA'') and dismissed. Nonetheless, she has stated a claim for benefits due under section 502(a)(1)(B) of ERISA, and that claim may proceed.

FACTUAL ALLEGATIONS

On a motion to dismiss, the Court “accept[s] all factual allegations as true and draw[s] all reasonable inferences in favor of the plaintiff.” Trustees of Upstate New York Eng'rs Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir. 2016) (citing City of Pontiac Policemen's & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173, 179 (2d Cir. 2014)). “[T]he complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference.” Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991). The Court also may consider any “documents [] in [the] plaintiff['s] possession or of which [the] plaintiff[] had knowledge [of] and relied on in bringing suit.” Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) (citing Cortec Indus., 949 F.2d at 47-48). Mary's complaint

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refers to several documents that the parties later included in their submissions to the Court. Most relevant here are a November 7, 2013 letter, Docket Item 11-4; a document titled Benefit Plan Prepared Exclusively for Ralcorp Holdings, Inc. Aetna Life Insurance Booklet-Certificate (“Booklet”), Docket Item 7-1; and an October 14, 2020 copy of a June 2014 termination letter, Docket Item 7-2. In light of this standard and these documents, the complaint tells the following story.

Alan was employed by Ralcorp Holding's, Inc. (“Ralcorp”), and, through Ralcorp, obtained life insurance coverage. Docket Item 1-2 at ¶ 5. Ralcorp offered group life insurance to its employees, and by virtue of that employment benefit, Alan was insured under policy # 883943 issued by Aetna (“the policy”). Docket Item 1-2 at ¶ 3. Alan named his wife, Mary, as the sole beneficiary. Id. at ¶ 6. In September 2012, Alan became disabled and was no longer able to work. Id. at ¶ 13.

After he became disabled, Alan sought continued life insurance coverage with Aetna. The policy provided that if Alan were “disabled as the result of a serious illness or injury, ” he would “be eligible for a permanent and total disability extended benefit if Aetna determine[d] that [he was] permanently and totally disabled.” Id. at ¶ 21; Docket Item 7-1 at 11. If approved, Alan would not have had to make any additional premium payments to maintain his life insurance coverage. Docket Item 1-2 at ¶ 21; Docket Item 7-1 at 11. On July 29, 2013, Ralcorp sent Alan a letter explaining that he could apply for a waiver of premium due to his disability and that if approved, his $82, 000 group life insurance policy would “remain in force for as long as [he was] disabled, or until [he] reach[ed] age 65, whichever [was] earlier.” Docket Item 11-3 at 2-3.

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Alan did just that, and on November 7, 2013, Aetna sent Alan a letter notifying him that his waiver of premium was approved, that his loss fell within the permanent and total disability coverage of Aetna's policy, and that his life insurance coverage would be continued, effective as of March 28, 2013. Docket Item 1-2 at ¶¶ 8, 10; Docket Item 11-4 at 2. The letter stated that Alan's “[b]enefits [would] continue, without payment of premiums, in accordance with the provisions of the [p]olicy” and would end when Alan turned 65 years old on December 23, 2021. Docket Item 1-2 at ¶ 9; Docket Item 11-4 at 2.

But turning 65 was not the only way the life insurance policy might terminate. That same November 7, 2013 letter stated that coverage would end if “[Alan] fail[ed] to provide proof of continued permanent and total disability as indicated” in the letter. Docket Item 11-4 at 2. Aetna's letter explained the process: Aetna would “notify [Alan] periodically to submit a completed [a]ttending [p]hysician's [s]tatement or request that [Alan] self-certify that [his] permanent and total disability continue[d].” Id. If he did not provide this information within 31 days after he received such a request, Aetna would terminate his life insurance policy. Id.

The Booklet similarly explained the extension process. The life insurance extended benefit would terminate if Aetna sent a request for “an exam or proof that [the participant was] still permanently and totally disabled[] and [he did] not go for the exam or provide proof of [] continued disability within 31 days of that date.” Docket Item 7-1 at 12. The Booklet further noted that if a participant's insurance “was extended continuously for [two] years, Aetna [would] not require an exam or proof [of continued disability] more than once in a [twelve-]month period.” Id.

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Alan passed away on July 29, 2019, and Mary sought the death benefit of $82, 000 under Alan's life insurance policy. Docket Item 1-2 at ¶ 12. But Aetna denied the claim and, on October 14, 2020, provided Mary a copy of a June 25, 2014 letter (“termination letter”) from Aetna advising Alan that his life insurance coverage had been terminated because he was no longer permanently and totally disabled. Id. at ¶ 24; Docket Item 7-2 at 2-3. Mary claims that neither she nor Alan ever received the June 24, 2014 termination letter and that the policy remained in effect when Alan died. Docket Item 1-2 at ¶¶ 12, 24, 26-27.

LEGAL STANDARD

To survive a motion to dismiss, a complaint must include sufficient factual matter, accepted as true, “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “Although the statute of limitations is ordinarily an affirmative defense that must be raised in the answer, a statute of limitations defense may be decided on a Rule 12(b)(6) motion if the defense appears on the face of the complaint.” Conn. Gen. Life Ins. Co. v. BioHealth Labs, Inc., 988 F.3d 127, 131-32 (2d Cir. 2021).

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DISCUSSION

I. PREEMPTION OF MARY'S STATE LAW CLAIMS BY ERISA

Aetna argues that Mary's claims are preempted by ERISA. Docket Item 8 at 11. This Court agrees. ERISA is a comprehensive statute that governs “employee welfare benefit plan[s], ” which include:

any plan, fund, or program . . . established or maintained by an employer . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries through the purchase of insurance or otherwise[] benefits in the event of . . . death[.]

29 U.S.C. § 1002(1).

ERISA also contains an express preemption clause: ERISA “supersede[s] any and all [s]tate laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA.^[3] 29 U.S.C. § 1144(a). “A law ‘relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.” Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008)

(quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983)). ERISA preempts not only “state laws specifically designed to affect employee benefit plans, ” Shaw, 463 U.S. at 98, but also preempts state common law claims “that seek ‘to rectify a wrongful denial of benefits promised under ERISA-regulated plans, '” Paneccasio, 532 F.3d at 114 (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 214 (2004)).

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Alan's life insurance policy was part of an employee welfare benefit plan. Ralcorp provided its employees, including Alan, with a life insurance plan through a group policy issued by Aetna. Docket Item 1-2 at ¶¶ 3-5. The plan would provide benefits in the event of death. Thus, ERISA governs the life insurance plan, and, accordingly, its preemption clause applies to Mary's claims if they “relate to” the life insurance plan.

Mary asserts state law claims for declaratory judgment, breach of insurance contract, and breach of the covenant of good faith and fair dealing. Docket Item 1-2 at ¶¶ 17-44. Each of those...